How to Kill Bitcoin (Part 2)
joekelly100.medium.com
joekelly100.medium.com
China and Russia and others would align against any Western powers seeking to destroy bitcoin at this point. Beyond that, many Western powers would start running the calculus of the potential upside of marginalizing USD by allowing bitcoin to continue, and choose to not participate or actively undermine efforts of those trying to kill it.
At best it would never materialize given the obvious diplomatic and game theoretic consequences. At worst, it would escalate to an arms race that may even spill over into a real conflict. I'll admit it would be somewhat ironic, in this era of fear around climate change, to see us get into an arms race over who can burn the most energy fastest in an un-winnable game that also doesn't have the same obvious consequences of not de-escalating as MAD.
May answer the question around the Great Filter. I wonder if we'll find ancient ASICs scattered across the surface of Venus.
The central point that any large nation state has more than enough resources to 51% Bitcoin is entirely valid.
While China and Russia may see some value in BTC weakening US hegemony, I wonder how much they'd be willing to spend to defend it. Right now the USA can probably spend more and also de-facto controls TSMC (Taiwan is a US client state), the most advanced fab that could make the most power efficient mining chips.
But to dismiss anything pointing out the flaws in Bitcoin as sour grapes from people who missed out? Wow. That's cognitive dissonance right there.
The simple truth here is that:
1. Bitcoin consumes an awful lot of energy;
2. It solves a problem for almost nobody; and
3. It's not as secure as people think it is.
I've become increasingly convinced that (1) is what will ultimately doom Bitcoin. I mean it will likely be replaced by something more energy-efficient (ie PoS vs PoW). But that transition will be a massive event in wealth redistribution.
As for (2), Bitcoin seems to have two forms of utility:
- To escape capital controls in many countries. Wealthy individuals in China trying to bypass Chinese capital controls was (IMHO) a big initial driver in Bitcoin. This also covers countries without a stable currency (eg Venezuela) or artificial limits on currency conversion (eg also Venezuela); and
- Illegal stuff.
You could argue that Bitcoin is also an asset you can hold for diversification purposes but ask yourself this: would people hold Bitcoin if it was expected to hold a constant value against the US dollar? Or another relatively stable currency? Or even a basket of such currencies?
That's impossible to know but I suspect not. I strongly suspect that expectations of BTC rising in value is a big part of why people buy and hold it. "Ponzi scheme" is one characterization of this. I'm not sure it's fully accurate but it's not that far off either. I think "tulip fever" may be more accurate. Either way, the chickens come home to roost eventually.
As for (3), I can't speak to the technical merit of the suggested attack in this post. It's known however that the network as a whole is vulnerable to a 51% attack (and I honestly believe there are several who could orchestrate such an attack if they were so inclined).
Personally I find this fascinating. And sure I wish I could go back to 2010 and buy $1000 worth of Bitcoin. But that applies to anything. Buying Apple in 1999. Buying Amazon at, well, pretty much any point. Buying land in the 1990s.
You're missing the big problems it solves, the main reasons many smart people have bought into it:
Cryptocurrencies are the ONLY liquid assets in the world that you can prove, from first principles, 1) how much of it exists, and 2) that you actually own it.
As long as you know what you're doing, you don't have to concern yourself with 1) fraud, 2) hidden stockpiles, 3) someone stealing it, and 4) political instability.
These are good things for society. Some of us realized these things when we started buying into it, and when we see people poo-pooing it and completely ignoring these benefits, I can see why people tend to get dismissive.
Reversible transactions for traditional currencies, for example, are often touted as a negative but they are for the most part a positive. It's what protects individuals from fraud. I hazard to think how the average person would manage a wallet without losing it to poor security or malware.
And if you use something like Coinbase, you have pretty much the exact same risk profile as using a bank.
Also, proving you own it gets real murky if the network itself is compromised. Attacks aside there have been various forks of different cryptos. My point is the immutability of the blockchain is essentially an optimistic exercise of faith.
As for hidden stockpiles and knowing how much is out there, that isn't quite true either. For something like Bitcoin, you know the upper bound of how much is out there but you don't actually know how much is out there.
There are numerous cases of lost wallet keys, for example, where you can consider the coins irrecoverable (short of a fork). But how many of these just haven't been transacted? Some of these stockpiles are huge too. Take the rumoured ~1.1M BTC associated with Satoshi. Are these lost or have they just not been used? It's impossible to say.
Sure, there are disadvantages. I'm not going to disagree with them, they exist, but let's put them in perspective with how the rest of the world works. But include the real benefits as part of the context.
If you ignore those benefits, and pretend they don't exist, you will end up getting dismissed by those of us who figured everything out, and invested in it.
You should keep in mind that those of us who invest in it are not in any way "stuck with a bag", we can sell at any time if we thought your arguments were convincing enough. The fact is, despite reading plenty of these arguments, we still actually believe it will ultimately succeed, and have yet to see convincing enough arguments against it.
On the other hand, those who missed out have a very strong tendency to want the world to adjust in ways that make their decisions correct. There is a lot of pain in admitting that you were wrong and paying the cost (which would be investing in it), and a lot of aversion to feeling like you have to make that choice. Believe me, I know this is a thing, because I went through that process myself.
There are several of these types of cryptocurrencies (representing gold, USD, EUR, or other "stable" units of account), and the largest of them, USDT, has 2.7M holders despite credible accusations of mismanagement of their billions of USD that supposedly back their issuance.
We don't need to guess: cryptocurrencies, even ones with a fixed value relative to USD, are useful and valuable to lots of people.
In other words, if not for the fact that there are structures in place that make it difficult to exchange Bitcoin for fiat currency, I would guess that, for most people's purposes, USDT would just be a chintzy knock-off of USD.
Compare that with the parliament of the most powerful nation on earth being overrun by a few thousand morons.
> parliament [...] overrun by a few thousand morons
Chose one!
And I think we already know the answer. Speaking of morons in parliament, the US has a lot of morons in their parliament as well.
What's next? Start a global brainwashing program to erase the idea of a decentralized network from the mind of people? It will only create a situation like we see with the war on drugs. Drugs won, at least we should learn from it. BTC might be a financial drug, but declaring war on it is equally pointless.
Point is, it might be possible to kill BTC, but the core ideas are here to stay with us on the long run. The genie is out of the bottle and it's not going back.
“We eradicate HIV. So what? Malaria will occupy it’s place in the list of deadly diseases.
We stop serial killer A. So what? Serial killer B will become number 1.
We stopped all burglars. So what? Cyber-crime becomes the leading threat!
It’s too late, the idea of the crime is out of the bottle! What do you want, to start global brainwashing operation to tell people that stealing is bad?!”
Well yes. Why not start a “global brainwashing program” of explaining to folks that burning a noticeable share of world’s energy to create a mechanism that is outside of control of (ideally) democratic and therefore accountable governments and is to a good degree under control of shady groups is not such a good idea?
Additional note for those interested. A while ago I watched a lecture by Francis Fukuyama where he talks among other things about states which collapse simply because they’ve lost effective control over part of their territory. That’s actually pretty scary and makes you think. It’s good when a government is able to control a certain thing but doesn’t. And it’s a different story when a government simply cannot do anything. https://www.youtube.com/watch?v=rKq_YvC1R14
P.S. Drugs are actually a bad example. Most of them haven’t won at all. And in many places they were practically driven out (including alcohol). Their price increases when you prohibit them. Their effectiveness does not depend on the number of users, etc.
1. Can there be consensus mechanisms that are environmentally sustainable? Does PoS work well? We have so many "new" blockchains with "new" consensus mechanisms but not enough information on the tradeoffs among them.
2. Do we actually need blockchain for anything other than finance? Can't we use p2p for things like governance? Can't we achieve a similar level of trust using traditional p2p tech?
If somehow you managed to muster the political will, the assumption that the cost structure could remain fixed is also laughable. As critics are quick to point out, Bitcoin uses a large amount of energy. Enough energy to mine 100 blocks ahead would require 100 times that energy, and that's assuming that the energy use stays constant, where it would clearly not do so. That amount of energy expended on the effort would be sufficient to substantially affect global energy markets, which would in turn affect the Bitcoin price.
The most you could hope for would be to bring up a mining operation that would be competitive with the rest of the network, and thereby throttle on-chain transactions. Bad news for you, ban-fans; the network is already severely throttled, and the price doesn't seem to be bothered much by it.
If they then chose to create more mining power to reach 100x (as the article proposes) of existing mining capacity they would likely find that beyond their means without stressing their economy to the breaking point because of the energy requirements. And as the price varied it's not clear that mining capacity would not grow in other places to reflect the increased price.
And this is putting aside the idea of political will, which is still something that even an authoritarian state has to deal with -- there are factions inside the CCP that would be happy to take power if the current leadership was damaging the economy through a useless fight against magic internet money, even if they phrased it in capital-flight terms.
I mean that's a rational objection, but I'm not sure it aligns well with US government spending policy. The US is planning to spend $5B per year on missile defence, which has so far not had a very high kill rate in tests. Maybe $5B for a 30% chance of shooting down a nuclear-armed missile that has a 5% chance of being launched is actually a good deal - I'm not saying that's wrong. But large defence spends to guard against strategic what-ifs is quite common for the US.
The article plays it a bit fast and loose with which sets of countries need to cooperate to bring bitcoin down. It lists "everyone from the G20 and beyond" as an example of an international coalition wanting to bring down Bitcoin. But it then admits
>>> Plus we’re mostly talking about China and the CCP here, since that’s where the majority of mining activity is, so, yeah.
But later says
>>> Overall, you successfully seize 80% of the global Bitcoin hash rate and all the best mining locations, and it’s now under your control to do with as you please.
But the first quote shows what the problem is with framing this as an action of an international coalition: China really controls 80% of the global hashrate, so even if every other country were on board, it is really up to China whether the network gets destroyed.
We been here before and governments have proven that they can't really seize anything online, for long. Look at thepiratebay, how long have people been trying to take that website down? It wasn't even decentralized before and they could still manage. How the fuck are they gonna manage to take down a decentralized network you can run from anywhere?
Protocols can change as well. Make the protocol automatically ignore miners connected from government IPs, and there is a 100 more solutions to this problem.
> China really controls 80% of the global hashrate
No, "China" as a country doesn't "own" 80% of the global hashrate. Bypassing that you can never really know where a mining operation is located (proxies are really easy to setup today), a lot of mining operations are indeed based in China, but just because the organization is based in China doesn't mean that the entire mining pool is based in China.
Taking down piratebay servers is fundamentally different from launching a 51% attack on Bitcoin. In the former, any mirror of the site that is left up can serve for everyone that wants to visit it. In a 51% attack on Bitcoin, any node running Bitcoin software would recognize the attack chain as valid, so everyone would have to make a coordinated effort to change their clients to fight back.
> you can never really know where a mining operation is located (proxies are really easy to set up today)
[1] here, by the way, is a project from cambridge that tracks IP addresses connecting to pools and says that 65% come from China.
It's not clear to me why one would go to the trouble of setting up a proxy to mine bitcoin, especially when speed of connectivity might be the difference between your block getting included or failing to get included. And if all these miners are going through proxies, why set them up in China specifically, when many other countries don't have laws against bitcoin mining?
Of course the situation with bitcoin vs state players is unique. If you can arrest people holding bitcoin you can obtain a significant amount of widgets for free and win the game without having to invest much.
Additionally, by constantly buying on the cheap you can lure the doubting rebels out of the woods.
STRATEGY #1:
* Bitcoin mining is effectively Peer-to-Peer DB sync.
* People who owned medium or high amounts of BTC run software that broadcasts good chains vs attack chains. They cryptographically sign it with their addresses.
* BTC holders who support keeping bitcoin going, are running a small number of mining nodes.
* They keep rejecting attach chains. They keep accepting valid chains. By side channel peer-to-peer sync by BTC holders.
* BTC effectively is forked. Attack chain keeps attacking their trash chain. Legit chain keeps processing transactions and rejecting sync of attack chains.
STRATEGY #2:
* Ethereum is years into PoS. Effort doubles down to finish this in 2 months.
* BitcoinPoS is created. Starts with BTC chain balances, but uses PoS. Every bitcoin is now living on BitcoinPoS chain.
* Gov attacker wastes $$ creating attack chains in PoW when bitcoin continues in the PoS universe.
Gov wasted $10 billion on this. Politicians are voted out of office. Politicians realize robbing the American people is unacceptable. Bitcoin was created because of the Wall Street 2008 Mortgage Crisis theft. The citizens don't take kindly and respond...
For two, pricing hash power as USD ignores that they aren't the same. The US doesn't need to spend $9m per day (actually $45m per day, since this is from Jul 8, 2020 @ 9k, and BTC has since went way up) since they can't buy Bitcoin ASICs any better than anyone else can, and probably a lot worse since govt procurement is fucked. There's a limited amount of ASICs in the world, and no matter how much they subsidize the electricity cost it doesn't do anything until they have 51% hash power.
- The US proclaims a "War on Mining"
- Using a bitcoin full node to track IPs, drones to find locations and warheads to "disable" mining operators, bomb every mining location once found
Approx cost of operation: less than "$100m per day"
The simplest way for the US to get rid of bitcoin is to secretly declare it a national security threat, then identify, apprehend, and possibly extradite a majority of the Bitcoin Core developers.
Then force them to release a new version which is easier to control, but incompatible with the old version. Maybe this is just a PoS version, with inherent flaws? If some of the miners stay with the old version that's fine - a fork helps your goal.
A lot of the discussion in the linked post is about specific ways that countries could take down bitcoin, but my main point is that if a majority of large countries wanted to take it down, they have a large variety of tools they could use to do so. Building a lot of hash capability is probably low on the list. The tech is built and run by people, and countries have a lot of ways of exerting power on people, should they consider it important.
Like, the US was arranging coups across central and south america so that bananas would be cheap, I don't think it's too far-fetched to think that violence is a tool they'd reach for to take down bitcoin if needed.
I stop reading any btc criticism at the endless climate impact/criminal activity discussions.
Of all the things that impact climate change, this is the offender we decide to focus on?
Of all the ways criminal activity is facilitated, this is currency we focus on?
Such a brilliant technology seems lost on HN because people are jealous they missed the boat.
It is a massive enabler of corruption and crime.
This whilst offering almost nothing back in return
In terms of low-hanging fruit of things to hate, yes this should be pretty damn high on the list. This is as a person who originally mined coins in 2011.
> Of all the things that impact climate change, this is the offender we decide to focus on?
Whataboutism...
> Of all the ways criminal activity is facilitated, this is currency we focus on?
Also whataboutism...
> Such a brilliant technology seems lost on HN because people are jealous they missed the boat.
What's so brilliant about it? And you're really projecting here re: the jealousy...
Then only word being 'whataboutism'... which is an infinite loop of an argument. Literally the same as saying "I know you are but what am I".
And clearly I'm on the crypto train. Why would I be projecting jealousy? That I secretly wanted to off the crypto train? lol
I had the chance to participate on a Ponzi scheme once, in 1993. I declined because I could not accept the idea of getting quick money knowing that 7 every 8 people would lose money.
If you see a group of people describing something you yourself participate in as environmentally and economically destructive, you have to choose a framework in which to process that information. Some options are:
1. Sure it has some, ahem, negative externalities and I am somewhat bad for participating. But all of those people are just as compromised as me and they're only mad because they didn't get in first. I am no worse than them. If anything, I'm at least honest about my position.
2. They are right, I am selfishly participating in something that benefits me at the expense of the world.
The problem with 2 is that acknowledging and wanting to be morally correct forces you to change your behavior. So 1 is an easy pick. But that doesn't imply that it's correct.
Yes, but that moral interpretation is based on the framework they use to contextualize the behavior. Is cutting down a tree moral? Well, if it was a fire hazard next to an orphanage, maybe. If it was endangered and you were going to sell it for personal gain, probably not.
Maybe, I missed the latest Medium article on why we are near adoption(!?). The tech is useless and detrimental to our earth. It finances terrorism, human trafficking and other ponzi schemes.
But Elon Musk... just pumping an unregulated market. The fact that he created Dogecoin is a pretty strong giveaway of his stance on the subject of the blockchain
Edit: Elon Musk didn't created Dogecoin
Now it is all about how Bitcoin is a ponzi, key reason for climate change and solves no issues whatsoever. Maybe all those things are correct (I don't know) but it sure was a good way to make a lot of money -- and most of the people here just missed it.
And this hate is not new. Look at this well commented thread from 2015 when Bitcoin went down to $180 and HN is still filled with comments like that this is not surprising and they don't see it coming back from hereon: https://news.ycombinator.com/item?id=8884838
We haven't learned anything? Have we?
But because we engineered a way to magnify the wealth of the people who need it least, at a huge environmental cost for no reason.
It's like all of the worst tendencies of our society reduced down and maximized.
Have you considered that there are indeed legitimate reasons not to like bitcoin, like those outlined by the previous commenter?
Or e.g. I think the detachment from the nation state is a dangerous element that will foster a race to the bottom on taxes, environmental standards, etc as capital gets even more mobile and untraceable than before. A small crowd gets the benefits and many many miss out with underfunded schools and healthcare...
I feel like this is an argument against money, not necessarily cryptocurrencies in general and even less against Bitcoin specifically.
Yes, creating opportunities will lead to people who don't really need it taking advantage of those opportunities. But, it also means that people who really need opportunities can take those too, as it's a open network.
So yes, richer gets richer while the poorer is getting poorer. At least cryptocurrencies are leveling the field a bit, so the the poor has a bigger chance out of poverty. As someone who used to be poor, I welcome the new War In the Status Quo.
Hasn't this always been the case, for all of humanity's existence?
"Cursed is the ground because of you; through painful toil you will eat from it"
Do lefties have a "not real capitalism" meme like the "not real communism" meme for righties?
I hate bitcoin because you can only participate (and become more wealthy) if you're already fortunate/privileged enough to be wealthy. It's just another thing that helps increase the divide between rich and poor.
Bitcoin is NOT about payments. Just stop saying that. Bitcoin is store of value. When you think about Bitcoin the closest analogy is gold. Sure it is more volatile but it is a 10yr old asset. If you look at the long term trend (past 10 yrs), your value only increased.
It is called bit-coin, not bit-gold. The designers of bitcoin intended it to be used for commerce.
In my opinion Bitcoin is the modern day tulip. It has no real value (note Bitcoin is not blockchain, which is a useful technology), uses tremendous amounts of real world resources and is in a massive bubble and will eventually burst leaving us all worse off.
Sure, some will and have prospered, but there is net loss of value for society.
This is all independent of whether one is peronally invested. I don't happen to own Bitcoin, but I do own shares of some companies that I actually want to see fail. But it is a sort of a hedge.
I can't remember the last time I saw a story about a new payments processor, or an actually useful thing. It's all "price price price" these days.
To me the shark jumping moment was when Coinbase and many other "crypto banks" reworked their UI/UX around presenting your holdings as a "portfolio."
When I log into my bank I don't see my "portfolio of USD." I see my account. I'd see USD in my "portfolio" if I had a Forex account, but then I'd be trading currencies not banking them to use as currencies.
It's a pure admission that for the vast majority of its user base the sole purpose is just to play pump and dump games.
The only group I see routinely using cryptocurrencies as actual currencies are online black market users and sellers, and they do so for an obvious reason that outweighs the downsides. Many of them have moved to Monero and Zcoin too since those actually have decent privacy. (Not foolproof, but decent.)
This is such projection. I have 0 regrets about not buying into Bitcoin (or any other hyped up blockchain tech). It represents the absolute worst of capitalism, selfishness, and anti-intellectualism. I sleep soundly at night having had 0 involvement. Also perfectly happy in my decisions to avoid: buying a lottery ticket ever, joining any MLM in existence, working for a hedge fund, hoarding XBoxes to re-sell them, etc.
> Now it is all about how Bitcoin is a ponzi, key reason for climate change and solves no issues whatsoever. Maybe all those things are correct (I don't know) but it sure was a good way to make a lot of money -- and most of the people here just missed it.
Annnnnd exactly demonstrating what I'm referring to. "These criticisms might be fully correct. I don't know! But it sure was profitable!" What a disgusting way of looking at the world.
> We haven't learned anything? Have we?
Clearly not.
What makes it worse is that these people who just got lucky think they're changing the world and are a part of some kind of movement. Some are evangelical and almost self-righteous about it. Some sound like cult members.
Just admit you won the lotto and stop perpetuating obvious nonsense.
The thing I find most obnoxious is the sector of the Bitcoin cult that talks about how they're going to destroy the useless legacy financial industry... when what they are doing by getting rich off a value-less token is everything they hate about financial capitalism distilled into its purest form.
Bitcoin is a reductio ad absurdum of financial capitalism, not a revolt against it. If it actually "took over" it would invert all financial incentives so that simply holding deflationary tokens became the safest path to profit, disincentivizing investment in any kind of productive work.
Financial capitalism and Wall St. get a lot of hate around here too for the exact same reason.
Edit: everything I hate about Bitcoin I also hate about much of conventional financial capitalism... but I don't hear very many Wall St. tycoons pretending they're changing the world or creating some kind of utopia. Many of them will flat out admit that they're purely mercenary. It's more honest.
If Bitcoin diverts surplus money from real estate for a while, and fellow software developers/cypherpunks sell it one day before the bubble bursts, therefore taking money from boomers and FOMOs, I am happy enough.
Interesting admission.
Wanting to see some group suffer seems to be the motivation for a decent amount of the bitcoin hate on HN.
Guess you simply hate some other groups more than you hate bitcoiners.
The success of Bitcoin isn't entirely rational. And people generally (probably disproportionately so on HN) try to analyze phenomenon like this analytically.
The thing is though...financial markets are not always rational. This isn't unique to BTC.
Edit: typo
I think bitcoin is genuinely hated, just like a lot of people and technology are hated.
It doesn't necessarily come from an analysis of bitcoin, whether rational or irrational.
And it doesn't necessarily come from people who are upset because they think they are too late to make money from bitcoin.
"Volcanoes contribute massively to climate change we need to turn them off to save the planet"
This article may seem far-fetched right now, but it's amazing how often novel new large-scale attacks turn out to contain elements that featured in speculative writing that was previously dismissed as being far-fetched.
Please don't post unsubstantive comments and especially please don't take HN threads on generic flamewar tangents and especially^2 please don't take HN threads on meta generic flamewar tangents. I know it's exciting in one way but it's boring in another way, and that's the way that matters. It only makes discussion worse.